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Brazil has ammunition to deal with global crisis- Rousseff
August 29, 2013, 9:58 am

[Getty Images]

Brazil can deal with the surging dollar due to its high forex reserves, says President Rousseff [Getty Images]

With the Brazilian real depreciating by almost 15 per cent against the dollar in the last six months, President Dilma Rousseff on Wednesday criticised the US monetary policy of injecting dollars into the economy as a stimulus measure, which led to significant exchange rate shifts.

The Brazilian Central Bank has held several currency swap auctions in a bid to halt the rise of the dollar.

President Rousseff stressed the real depreciation is down to external factors like the US stimulus measures.

Brazil can deal with the surging dollar due to its high forex reserves, currently amounting to $372 billion, said the president.

“We are certainly among the five or six countries in the world with the biggest foreign currency reserves,” Rousseff said during a radio interview.

“We have what is called ‘ammunition’ to deal with those global situations,” she added.

Brazil’s central bank said last week that it will infuse $60 billion worth of cash and insurance to the foreign-exchange market by the end of 2013 to aid the real.

Rousseff also announced that the bidding to explore Brazil’s pre-salt reserves, will help create a better economic environment for the country.

The Brazilian real and the Indian rupee have taken the worst hits since the US federal reserve hinted that it might scale back the $85 billion a month bond-buying programme.

Meanwhile, the International Monetary Fund (IMF) on Wednesday endorsed the Brazilian recovery.

“Brazil’s economy is recovering gradually from the slowdown that began in mid-2011,” the IMF Executive Board said in its annual assessment of the Brazilian economy.

The IMF praised the Brazilian government for “containing inflationary pressures by tightening monetary policy”.

The Brazilian government has revised its growth forecast to 2.5 per cent this year.

Source: Agencies